Answer and Explanation:
The preparation of the incremental analysis is presented below
Particulars Make Buy net Income Increase or (decrease)
Direct material $120,000 - $120,000
[$4 × 30,000]
Direct labor $150,000 - $150,000
[$5 × 30,000]
variable manufacturing $105,000 - $105,0000
[$150,000 × 70% ]
Fixed manufacturing $45,000 $45,000 -
Purchase price - 373,560 -$373,560
[30,000 × $12.95 ]
Total annual cost $420,000 $433,500 -$13,500
There is a decrement of $13,500 so it should be make decision rather buying decision